I attended a seminar titled ‘Improve your life through better decisions’ yesterday. Michael E. McGrath was the speaker. He has written several books on the subject – available on Amazon.

His mission is to help people improve their lives through better decision making. He provided a handout on the top ten self-destructive behaviors causing bad decisions:

* Indecision – when you just can’t make decisions

* Not thinking it over – Making rash and impulsive decisions

* Emotional decisions – letting your emotions control your decisions

* Running with lemmings – bowing to the pressure of others without thinking

* Acting like a frog in boiling water – letting decisions pass you by

* Falling for pressure tactics – being forced into buying something you shouldn’t

* Buyer’s remorse – regretting your purchase decisions

* You can’t choose what you hadn’t thought of – not considering all your options

* Failing to run the numbers – not considering the true cost of your decisions

* Unintended consequences – not anticipating the consequences of your decisions

I am sure that all of us can relate to one or more of these.

Our Thoughts...

I hadn’t really thought about how my decisions have affected my life. As I think about it now, I see his point – I could improve my life through better decisions.

I would add the following to his destructive behavior list…

Based on my experience, I have seen many companies make technology decisions before understanding the problem and looking at likely potential solutions. Choosing the technology first is like the tail waging the dog.

Regarding indecision…

Several prospects as well as Michael McGrath point out that it is frequently better to make an adequate decision that is timely than an optimal decision that is too late. In the case of enterprise software, what you will learn while going from purchase to implementation could very well be worth it. And, as I pointed out in an earlier ‘ideas’, your current problem is costing you some amount of money each and every month.

Your Thoughts...

You are looking to solve a business problem. You have determined that there are software alternatives that will reduce or solve the problem. Often, you will discover a couple different approaches to solving that problem - Software Suites/Platforms vs. a Complete Solution.

An enterprise BPM suite or platform will be sold in modules. The most common modules include: Process modeling, Process [business rule] engine, Process analysis tools, Process simulation and an Integration server [or toolkit, or…]. Each of these modules are sold separately and may require some integration to get them all to work together.

A complete solution is just that – you purchase one piece of software that has some or all of the elements of each of the modules [identified above] built in.

Our Thoughts...

The enterprise BPM suite or platform approach…

The decision to sell the software by modules is a marketing decision. They hope to gather more revenue from their customer by selling the software in pieces. These more expensive suites or platforms may have more features than the alternative – as a matter of fact; they may have features that you will never need to use. Often, getting all of these modules to work together will require some software services.

If you haven’t noticed, the companies selling modules will also have a large professional services organization.

A complete solution…

Selling a complete solution is also a marketing decision – they target a specific market. They intend to service their specific market particularly well so that they can dominate their space. Their software will include all of the features necessary to create an application that will put them on top.

So, you have to decide…

You could go with SAP or Oracle, for example, and spend big bucks now to solve a not so expensive problem. The upside - this may enable you to solve other business problems in the future; The downside – it does lock you into purchasing lots of software services.
Or, you can go with a complete solution today that will solve your problems rather inexpensively. The upside – the solution is less expensive and the solution will be implemented sooner; The downside – you may have to buy more software in the future.

Your Thoughts...

Since we made a marketing decision to be a complete solution, I am very interested in your thoughts…

Forrester recently interviewed 164 IT Architects – some of the results follow…

13% said that they had no plans for implementing BPM. The primary reasons were: high project costs; lack of proven benefits; lack of technical resources; and the complexity of the project.

The 87% that are implementing BPM expected: increased productivity for process workers; real time visibility into key processes; consistent process execution across business units; and optimization of their business processes.

As a result of their interviews, Forrester noticed a strong correlation between a BPM Center of Excellence and BPM project success. The premise – if senior management is willing to support a BPM Center of Excellence, then they are definitely supporting this BPM effort.

Our Thoughts…

Regarding those not implementing BPM – I have talked with many companies that have reflected those same findings. I have seen project costs and lack of technical resources as the biggest obstacles.

Regarding expectations – I see these expectations as the reasons companies buy into BPM to begin with. If you didn’t believe your process cycles take too long, you wouldn’t be looking into BPM. The 2 biggest elements of shortening cycle times are to control how long process steps take and to have visibility into the process to see that it is on time. If the process is late, you will be able to quickly see that fact and make resource adjustments.

A key requirement for the success of any large enterprise solution is management support. I am not convinced that a BPM Center of Excellence is the way to go, but I am convinced that you need management support. So, you know your company – choose a path that will garner management support.

Your Thoughts…

Most people would expect BPM software to shorten cycle times. And, it is easy to show hard dollar savings from shortened cycle times. There are other benefits to using BPM software that are much more difficult to put into hard dollars.

Forrester has identified a very important one – Increased Productivity. They reviewed more than 50 BPM related customer case studies. They determined that these companies achieved increased productivity by:

• Automation of tasks
• Auto-invocation of business rules
• Orchestration of mass changes
  

How did they know they were successful? Fewer resources were required to achieve their business objectives.

Our Thoughts...

Increased Productivity, as explained above, will provide a ‘time to market’ advantage and can reduce costly ‘mistakes’.

Simple logic says that if you can automate tasks and auto-invocate business rules, the result should be fewer mistakes. And, mistakes can be costly.

Most people don’t really understand ‘time to market’. Let’s look at a couple of examples of the importance of ‘time to market’.

Amazon was the first company to sell books on-line. Their competition didn’t really believe in selling books on-line, so they waited to get into that market. By the time they got there, it was too late. Amazon knew how to market their books. They knew where and when to stock inventory. They knew how to ship and had relationships in place. It will be a long time before anyone supplants them as #1 bookseller.

Apple was the first company to see that a better idea for a ‘walkman’ was to use flash memory. They came up with ‘sexy’ packaging – the iPod. They saw an opportunity to be your music store. They put it all together and got to market before competitors could respond. They made it difficult to compete by making sure songs bought at the Apple store would only run on an iPod. There are others out their now, but can they are far behind?

Apple is also an example of being late – they were late with the iPhone. They have to go the extra mile with deals, features, etc. to get people to stop using a phone that they just purchased and spend big bucks for this new fancy phone. Think how much easier this would have been had they been first.

The moral of the story – it is much easier if you are first. And, the first one to market can make a lot more money.

Your Thoughts...

More from a white paper about contract manufacturers

Since everything they manufacture is a custom product, they have issues that are unique to them. However, some of their issues may exist in your company as well.

Their primary challenge is achieving effective communications between departments which traditionally function independently – sales with engineering and engineering with manufacturing.

This week, let’s examine engineering issues.

• Clashes between sales and engineering – sales sells a product that engineering has determined can’t be built
• Re-engaging the customer during the design process due to post-order discoveries made by engineering
• Time pressures don’t allow for enough engineering time for the best design
• Engineering budget is mostly consumed by sales-related or order-engineering tasks leaving little money for new product innovation and development work
  

Our Thoughts…

These issues must look familiar to most of you. I am sure that these issues are taking up potential profit dollars.

I see a couple of key observations that can be made: There is a business process that is not working well [or processes]; and, when these processes cross departmental boundaries they are very disruptive [difficult to manage].

Let’s define a process as a collection of related, structured activities [a chain of events] that produce a service or product. Even before you think about software, you can map out your collection of related, structured activities and manage them to completion. When you are attempting to map out the activities across departments, you will learn what disruptive means…

It would be interesting to see what your real costs are surrounding these issues. I bet you would be surprised.

Your Thoughts…

Recently, I was reading a white paper about contract manufacturers. Since everything they manufacture is a custom product, they have issues that are unique to them. However, some of their issues may exist in your company as well.

Their primary challenge is achieving effective communications between departments which traditionally function independently – sales with engineering and engineering with manufacturing.

This week, let’s examine sales issues. I pick this one first because I see lots of room for improvement.

• The quote process is so lengthy that it keeps the bid success rate low
• Sacrificing accuracy/completeness of customer requirements in an effort to shorten the quote process causes way more problems than it solves
• The inability to know the margin on an order at the time of the quote – will your company actually make a profit on this order
• Lengthy approval process for drawings and 3D models
• Frequently going back to the customer to re-price an order due to ‘late stage’ discoveries
  

Our Thoughts…

I believe that most companies understand their change process and I believe that they know that this is the most complex and expensive process in their organization.

I also believe that most companies understand there are problems surrounding their sales and quote process. And, I believe that most companies have no idea how much this is costing them in their relationships with their customers and in shear time [dollars]. Think of the [daily/monthly] frustrations that you and your employees must endure.

My take – On one hand, I see many companies facing these issues regularly and on the other, I don’t see much attention [$] being paid to resolve them.

Your Thoughts…

Example of Efficiency…

About 20 years ago, I was a salesperson for a large computer company. I wasn’t a participant in this story, I was just an observer.

I heard that the president of the company mandated that all divisions cut costs by an order of magnitude in a single fiscal year. I remember thinking at the time that a ten fold decrease in costs was impossible.

At the end of their fiscal year, they put out the word that they had been successful. I would imagine that some divisions did well and others did not. I did uncover their strategy and here is how they did it…

They followed these 5 steps to shorten their process cycle times:

• Document the process – Each division documented their processes.
• Prove that you have the correct process – Each division had to try to run the defined process to prove that they had the definitions correct.
• Run the process – They ran their proven processes.
• Measure – They measured how long each process was taking.
• Improve the process – They attempted to improve the process.

They ran the new process and measured the difference. This allowed them to either roll back or move forward.

Remember, this was 20 years ago and processes weren’t very efficient to begin with. Of course, there were other cost cuts that added to that number.

Our thoughts…

I believe that this is a sound strategy and I still recommend it to our new customers.

I see Process Optimization as having 2 key components – There is a Manual component that you can continue to improve to shorten process cycle times and there is an Automation component that allows software to perform mundane tasks within your processes to further shorten your process cycle times. In addition, the automation software provides control over how long steps will take, provides process metrics and provides visibility into the status of your processes.
Results – Your Company is more Efficient.

Your Thoughts…

I was reading an Email from ebizQ on BPM Discipline and it reminded me that Business Process Management is not just about software and it is not about SOA, it is more than that.

They say that BPM technology is meaningless without management discipline. They say that to establish a successful BPM discipline, you need to ask yourself the following questions:

• Which processes matter?
• Which processes need to be improved or automated?
• Who will take charge of improving and automating key processes?
• How will technology support automation and optimization?

They say that BPM discipline involves the deliberate and collaborative definition, optimization, innovation and management of business processes.

Our thoughts…

With my sales hat on, I believe that a company is ready to purchase a solution when they know the answers to the questions above.

The processes that matter are the ones that cause the most pain within your company or they are the most expensive ones. If you know the cost of the problem, it is much easier to look at solutions.

I would bet that the processes that need to be improved or automated are the most expensive ones. Someone should figure out the costs associated with a process [although many do not].
Someone must be responsible [take charge] of improving and automating key processes.
Understanding how technology will support automation and optimization will provide the justification for your solution purchase. If the cost of the solution is greater than the cost of the problem, maybe the problem is not big enough yet.

A friend of mine, who is a CFO, keeps telling me that it would be better to do something now and fail than to study it for a couple of years to make sure you are doing it right. Even if it fails, you will learn enough to make the proper decision later.

Your Thoughts…

What do you think - Dive in and take your chances or study it to death?

Let’s say that you own some stocks and today, you don’t look to how they are doing. Or, let’s say you drive a large SUV that gets 12 miles to the gallon – you have been talking about trading it in for something hybrid [but not today]. Or, your shoulder hurts and you have been thinking about seeing a doctor [but not today].

You may not realize that in each of these cases, you have actually made a decision – a decision to do nothing.

In the case of your stocks, the decision is that you will live with whatever happens to the prices of your stocks today.

In the case of the hybrid, the decision is that you will continue to pay at least twice as much as you could for gasoline.

And, in the case of your shoulder, you may not realize that you have torn your rotator cuff and if you wait a couple of years, they can no longer fix it [my true story].

Our thoughts…

Last week I mentioned that it would be better to do something now and fail than to study it for a couple of years to make sure you are doing it right. Even if it fails, you will learn enough to make the proper decision later.

This week, we are talking about the costs associated with making a decision. Once you have identified the processes that matter to your company - the ones that cause the most pain or the most expensive ones. Gather the costs associated with these processes – let’s say they are $X.

Your Decision Alternatives

Do nothing – Your Company will continue to spend $X. These extra expenses will continue to reduce your company’s profits each and every month.

Fix the problem – You identify a person to manage the project; You identify the plan to improve and automate the problem; And you select the most cost effective solution that will support automation and optimization. End result – costs are reduced by some amount less than $X and your profits rise by an amount similar.

In the high flying 90’s when companies were making all sorts of profits, they didn’t spend much time looking to reduce costs. Today, the economy has slowed significantly; it only makes sense to tackle cost reduction.

Your Thoughts…

Or does it?

Part 4… More of ‘What’s in it for you?’

As you know, I have been talking about efficiency for quite a while. Of the many definitions, I see efficiency as the ability to accomplish a job with a minimum expenditure of time and effort. I have to believe that a company’s main objective is to reduce costs, increase quality, increase revenues and, finally, increase profits.

The last several ‘ideas’ covered reducing costs, increasing quality and increasing revenues, this one covers Increasing Profits.

On the Topic of Increased Profits

Obviously - If you really can reduce your costs and increase your product or service quality and increase revenues, your profits will have to increase.
One reader pointed out that you may be able to make one process more efficient, but adjacent processes may prevent you from actually achieving shortened cycle times. Obviously, more processes within your company make it harder to achieve efficiency. But does that mean you don’t try?

One strategy that I have learned over the years is to ‘plan the work and work the plan’. If you don’t make an effort to be more efficient, you definitely won’t get there. So, do some strategic planning – and go work the plan.

One side note – When a company is going gangbusters [sales through the roof] they tend to ignore inefficiencies. When that company is struggling for revenues and profits, then they begin looking to be more efficient. Obviously, it is much easier to attack inefficiencies when there are revenues and profits.

Your Thoughts…

We just received an Email from CIOINSIGHT.

Their focus - CIO’s want better business processes and more productivity from emerging technology.

They conducted a survey of almost 300 senior IT executives – they found that helping the business grow is still the No. 1 driver behind emerging technologies, but at least half of the execs no say reducing costs is becoming a much bigger factor.

Our thoughts…

Over the last year or so, I have been putting a lot of emphasis on Efficiency. I believe that the objective for ‘Every Company’ must be decreased costs, increased service and/or product quality, increased revenues and increased profits. The Email from CIO Insight reflects that thought.

Adding fuel to the fire, they talk about the top goals for adopting emerging technology. Those goals include: Improving business processes; Increasing productivity; Reducing costs; Increasing revenues; Providing new products and services; Ensuring security, privacy and compliance; and Keeping up with competitors.

They found that 70% of the CIO’s responding said that improving business processes was their number 1 objective. It was #1 among companies of all sizes.

I see all of this as evidence that Efficiency is a key business objective.

Your Thoughts…

What are the key objectives this year for your company?

Part 3 - More of ‘What’s in it for you?’…

As you know, I have been talking about efficiency for quite a while. Of the many definitions, I see efficiency as the ability to accomplish a job with a minimum expenditure of time and effort. I have to believe that a company’s main objective is to reduce costs, increase quality, increase revenues and, finally, increase profits.

The last couple of ‘ideas’ covered reducing costs and increasing quality, this one covers Increasing Revenues.

On the Topic of Increased Revenues

For the sake of argument, let’s assume that your efforts to be more efficient are successful. This means you have reduced the cycle times of your processes and it could produce several advantages that would result in increased revenues.

If I can produce more goods in the same amount of time and there is a market for them, it would increase revenues. Ford planned to manufacture a specific amount of new Mustangs. The demand has been much greater than that amount. They were able to increase output some, but not enough to maximize the revenue potential of the Mustang.

Time to Market is not a new concept, but what does it mean? If you can get to market early with a high demand product, you can capture a larger revenue stream than the competition. Let’s look at the Apple iPod. They were there first to market. They created the demand. They had the inventory to meet the demand. Early to market enabled them to build a successful music distribution service. By the time Microsoft responded, the Apple customer base was set. The Zune is playing catch up and is not likely to ever make up the lost ground.

If you are late getting your product to market, you may lose market share that you can never get back. Amazon.com was the first company to sell books online. They put in place inventory, infrastructure, logistics and big advertising. They had been up and running [gaining market share] for at least a year before stores like Barnes & Noble realized that they needed to get into that market to compete. Barnes & Noble will never be able to make up that gap.

Our customers have discovered an additional advantage to efficiency. They are using it as a selling tool to get new business. They bring in their prospects and show them how efficiently they manage their design and manufacturing processes. They are landing new business – new business yields new revenues.

You may have not have given it much thought, but Efficiency can increase your revenues.

Next topic – increase Profits

Your Thoughts…

Part 2 More of ‘What’s in it for you?’…

As you know, I have been talking about efficiency for quite a while. Of the many definitions, I see efficiency as the ability to accomplish a job with a minimum expenditure of time and effort. I have to believe that a company’s main objective is to reduce costs, increase quality, increase revenues and, finally, increase profits.

The last ‘ideas’ covered reducing costs, this one covers Increasing Quality.

On the Topic of Increased Quality

In a manufacturing environment, quality improves reliability and increases production. Fewer defects translate to fewer warranty claims and increased profits. It costs money to improve quality, let’s look at where you are likely to spend money…

Prevention – New product review processes; Quality planning; Supplier approval process; Process capability evaluations; Quality improvement team meetings; Quality education and training; etc.

Internal Failures - You are able to discover the failure before it gets to the customer, but now spend cash on scrap, rework, re-inspection, re-testing, materials reviews or downgrading.

External Failures – After the customer has the product, you are processing customer complaints, customer returns, warranty claims and doing product recalls. We know one large aerospace company that delivered a faulty product and it cost them over $2 million to correct it.

Most companies looking to improve quality will revisit their processes and re-engineer them to prevent quality defects and internal/external failures. They look to Six Sigma, Lean manufacturing and TQM strategies for help. The bottom line: A large number of manufacturing companies are achieving real success and real success increases their profits.

Next topic – increase Revenues

Your Thoughts…

I ran across something from the University of California that I found interesting. They are addressing the topic of process simplification. They have identified what they believe is the foundation for process quality, improvement and innovation. They describe this foundation as having 5 'piers'.

Their 5 'pier' foundation includes: Simplified accountability, Better information, Responsive structure, Behavioral values and Leveraged technology. Building on these 5 'piers', your company can streamline their processes.

Why is this important?

They believe that streamlined processes will reduce process cycle times, improve transparency and improve quality.

Our thoughts…

As you know, I have been talking about efficiency for quite a while. Of the many definitions, I see efficiency as the ability to accomplish a job with a minimum expenditure of time and effort. I have to believe that a company’s main objective is to reduce costs, increase quality, increase revenues and, finally, increase profits.

I think it is important to discuss ‘what’s in it for you?’ - So I will make this a multi-part newsletter. I will address the following: Reduced Costs; Increased Quality; Increase Revenues; and, Increase Profits over the next several ‘Ideas’.

On the Topic of Reduced Costs

Select any process within your company. If you could simplify/reduce the time it takes to complete that process, wouldn’t that reduce the costs associated to that process. If you could do this to multiple processes, wouldn’t that reduce costs.

Let’s look at a specific example. A paper based change request process costs a company $2,500 per change request just to manage the request process. If you process 50 changes per month, your costs would be in the neighborhood of $1.5 million. Our customers are experiencing an order of magnitude reduction in the cost of managing change requests – today it costs them about $250 per change request. They are seeing a savings greater than $1 million a year.

The University of California article talks about ways you might streamline your processes. You can reduce the number of: hand-offs, steps, wait/delay intervals, signatures, decision points and pathway options. This assumes that you can dictate what steps are to be taken and how long it should take. This assumes that you can actually see where an activity is within its process – if it is late, you could do something about it.

Next topic – increased quality

Your Thoughts…

BPM Initiatives

BPTrends (www.bptrends.com) performs many surveys during the year. I found these results worth discussing…

• 53% use process modeling and analysis tools
• 38% use business process automation software
• 61% are actively pursuing departmental process improvements
• 45% have active process improvement projects in place
• 36% have a dedicated business process practice group or a center of excellence

A couple of their conclusions:

1. About one quarter of all companies responding have been able to leverage early BPM success into repeatable programs.
2. Companies with a center of excellence are far more successful than those without.
   

Our Thoughts...

I did not see their questions, so I am not sure if the results are skewed by the wording of those questions. These are the numbers gathered only from companies that are willing to respond to their survey. If you could look at ALL companies, I am sure that the results would be different.

Talking to our prospects…

Our conversations are centered on departmental process improvements [so that high percentage doesn’t surprise me].

Talking to our customer base…

We see about a third of them leveraging their early BPM success into other successes. They see the new found efficiencies in their initial process and are now looking for that kind of efficiency from other processes.

None of them has created a ‘center of excellence’ but they do have some kind of ‘loosely knit’ group discussing their business processes.

Your Thoughts...

Is your company embarking on any of these activities? Will you do it all internally, or hire outside help? What about creating a center of excellence?

Collaboration

I chose collaboration as a subject because it seems to be the latest buzzword.

One white paper on Collaboration says that collaborative business processes are unique. They not only depend on people, but expect them to work collaboratively on specific activities to achieve an outcome.

They go on to say that collaborative processes need a different approach. And that the new approach is made possible by the cohesion of several technologies: portal, collaboration, search, workflow and business process management.

Our Thoughts...

The notion of collaboration is not a new concept but maybe a new buzzword. I would be surprised if most processes didn’t have a collaborative component. I know that even in our small company, we collaborate on most of our processes.

We don’t believe that collaborative business processes are unique. Looking back at ‘our’ definition of a process – A collection of related, structured activities [a chain of events] that produce a service or product - notice that this definition does not say that it excludes collaborative processes. Our expectation is that collaboration will take place in most processes.
We also take exception to their notion that collaboration is a technology - we see it as an activity. And, search is more about the activity than the technology. However, the implication that there will be some database to search against is something that we see as necessary and we provide it.

Rather than an approach, we would state that business process management uses a collection of technologies that include: portal, document management, business rules management [more than just workflow], process execution, process monitoring and analysis.

What does all this mean? If I want to automate a collaborative business process, I will need portal technology [web based application], document management, business rules and process execution. If I want to improve my collaborative business process, I will need process monitoring and analysis. And, if I am successful at managing/automating my collaborative business processes, my results should make my company more efficient.
Efficiency always shows up on a company’s bottom line.

Your Thoughts...